Historically, American Express charged merchants high fees that helped to fund premium perks and establish an air of exclusivity around its brand. Many of its cards are targeted at affluent businessmen and businesswomen. One analysis shows American Express makes roughly $60 per year, per account, in interchange fees. That's more than double what banks like Chase or Discover make. Other issuers derive more of their revenue from interest charges.

AmEx's strategy came at a cost. Because AmEx was making more money with each swipe of its cards, fewer merchants were willing to accept cards donning the blue centurion logo. Currently, Visa and Mastercard are accepted at 1.3 million more merchants, chiefly because they are more affordable.

Squeri now plans to cut these fees by five to six basis points—the largest decline in price since 1998. The new CEO hopes the move will entice more merchants to welcome their cards with open arms.

More recently, American Express has also come under legal scrutiny over its fees. The U.S. Supreme Court will determine whether AmEx's merchant fees are in violation of U.S. antitrust laws. Currently, American Express forbids merchants that accept AmEx from steering customers to use low-fee alternatives. It's unclear whether the new changes to its fee policy are a response to these legal hurdles.

The Potential Impact to Cardholders

If AmEx's plan to increase its merchant network goes as planned, the fee revenue will increase and things will play out as they would otherwise, as far as cardholders are concerned. However, if more merchants don't come on board and revenues dip, credit card rewards are likely to take a hit. With merchant fee revenue down, reward spending would become a much larger chunk of overall revenue. This may force AmEx's hand to cut some of its perks.

The company's merchant fee revenue has grown substantially over the years. This has allowed AmEx to steadily increase the funds it can dedicate to cardmember rewards and benefits. The bank has steadily rolled out premium perks that defined the luxury brand, especially on flagship products like the Platinum Card. AmEx has launched new cardmember-only airport lounges, provided Uber credit, and even bought out Citigroup Inc.'s Hilton credit card business, increasing its total co-branded portfolio.

AmEx spending on cardmember rewards.ValuePenguin.com

Thanks to the increasing fee revenue, American Express was able to compete in the intense rewards wars that have been raging among credit card issuers for the last five years. JPMorgan Chase, one of AmEx's biggest competitors, took a loss of up to $300 million in profits because it poured so many benefits into a single card—the Chase Sapphire Reserve. This is why the new strategy—as laid out by Squeri—is a big gamble. Whether AmEx cardholders will feel the sting of a failure will ultimately depend on how the company chooses to react. However, if history has shown us anything, downturns in merchant fee revenue spell bad news for rewards lovers.

In 2015, the European Parliament placed restrictions on merchant fees in European Union member nations. Almost immediately, Capital One, which issues cards in some of the member nations, announced it would significantly cut its cash-back rewards. Last year, the European Payments Council released an overview of the impact that regulation had across the EU cards market. The council found that issuers were forced to "cut back on consumer loyalty programs and cash-back offers." They add that "several have introduced card fees."

In Europe, American Express fought these regulations in court. However, last month, the European Union's highest court ruled that AmEx's co-branded cards are subject to the same interchange fee regulation as other credit card companies.

I am a financial services analyst at ValuePenguin.com, a personal finance research website. I come from a heavy quantitative background, which helps me in bringing clear and thorough coverage of different financial products and their surrounding industries – including banki...